IS IT STUPID TO CARRY STOCKS OF A BIG GAME COMPANY?

LEAN AND FINE COMPANY

Supercell is famous because of their Clash of Clans title. The company itself is very young but it has catapulted itself among game industry greats. Year 2013 turnover was 672 million euro and profit totaled whopping 349 million euro. They have two titles and third one coming out March 2014. It has taken only about 140 people to produce these amazing results as that is the amount of people who work for the company. Softbank bought 51% slice of the company and by doing it set the valuation up to 2,2 billion euro (thats about 3 billion USD). Insane, right? Company was founded 2010 even more insane, right?

FAT AND BLOATED COMPANY

Now let's take a look at the other side of the coin. There lurks the industry behemoth Electronic Arts once touted to be the best game company there is. Such a sorry state they are in now. Almost makes me sad but not really. If you take a look on my already fossilized articles I have been writing about Electronic Arts on this blog already almost ten years ago. I have always had some dislike towards their business practices just buying titles and market share almost as if they are a pure marketing company, which doesn't care about the games themselves, as if they just happened to be games they are in could very well be toiletries for all they care about. Anyway, this big juggernaut finds it increasingly difficult to make money it must be all those management, marketing, merger and acquisition people who load the EA boat with heavy costs and all the brand name game titles have not been enough to maintain the profitability.

PUBLISHING IS OVER IN GAME INDUSTRY FOCUS ON GAME DEVELOPMENT

The old way of bringing games to the market has changed. App Store, Google Play and Steam have all the audience you could possibly ever want. Since publishing is easy the focus must be the actual product and the story why people should pay attention and play it.

If you need marketing campaign just let Youtube gaming celebrities do their work and you instantaneously reach an audience of millions of viewers. Couldn't be better times for game development companies.

SELL THE STOCK OF YOUR BIG NAME GAME COMPANIES

Don't bet your pension funds on this advice but take it seriously anyhow. You need to unload the big juggernauts since they are bloated, rigid and generating losses, which will show in the valuation quite badly.